"Sodium-ion batteries" = "the new oil"! Morgan Stanley raises the slogan: reshaping the key bottleneck for energy and AI development

In an era driven by AI and explosive growth in electricity demand, a battery technology revolution is being elevated to the level of energy strategy by top investment banks.

According to Wind Chasing Trading Desk, Morgan Stanley’s latest global in-depth research report defines the era of sodium-ion batteries as the "New Oil Age," stating: "In an AI-driven, electricity-intensive world, sodium-ion batteries address the key bottleneck at the intersection of energy security and AI. It is far more than a niche experiment."

The story of sodium-ion batteries is no longer just about being a "lithium replacement." After AI data centers push up electricity demand, energy storage systems must meet three criteria at the same time: cheap, fast deployment, and supply chains not constrained by a few minerals. Sodium batteries hit exactly these points: no lithium used, reduced dependency on copper and graphite, better low-temperature performance, and a cost target much lower than lithium iron phosphate (LFP).

The report expects that sodium-ion batteries will account for about 2% of global battery deployments in 2027, then accelerate to 20% by 2030 and 37% by 2035. By 2035, annual global deployment of sodium-ion batteries will reach 2.4 TWh, with an optimistic scenario at 3.7 TWh, and will generate around $800 billion in new investments.

What is being rewritten is more than just battery chemistry. Sodium batteries first impact energy storage, commercial vehicle fleets, and small passenger vehicles; beneficiaries include battery and equipment manufacturers, energy storage integrators, logistics and commercial vehicle OEMs; those most at risk of being replaced are lithium miners, copper foil manufacturers, and graphite anode producers.

The problems are real: can the 30% to 40% cell cost advantage be transmitted to system cost, can hard carbon anodes and sodium battery cathodes be supplied stably at scale, and will project financiers and automakers quickly approve new chemistries. These variables will determine whether sodium batteries' penetration curve will be an S-shaped explosion or gradual evolution.

At the Intersection of AI and Energy Security

The narrative logic for sodium-ion batteries is no longer limited to being a "lithium alternative."

AI data centers' demand for electricity is reshuffling the priority order of energy policies, shifting the focus from pure decarbonization to electricity prices, deployment speed, and supply chain sovereignty. The report points out that by 2030, Asian data centers may consume about one-sixth of the region’s new electricity. For power grids and data centers, batteries do not need to pursue the highest energy density, but must be cheap, safe, reliable at low temperatures, and not have supply chains constrained to a few minerals.

The competitiveness of sodium-ion batteries falls squarely into this range. They do not rely on lithium, use hard carbon in the anode instead of graphite, and use aluminum foil instead of copper foil needed in lithium batteries, further cutting material costs. Even more important is low-temperature performance: at minus 20 degrees Celsius, sodium-ion batteries retain about 90% of their capacity, while LFP can retain only 50% to 60% under the same conditions—this difference is especially critical for northern regions expanding AI infrastructure the fastest.

In terms of cost, as scale effects are realized, the unit cost of sodium-ion batteries will drop from the current about 0.35 RMB/Wh to 0.22 RMB/Wh, a decrease of about 36%, which closely mirrors the cost curve of lithium-ion batteries over the past decade.

Energy Storage: The Ratio with Photovoltaic Pairing Will Be Rewritten

Stationary energy storage is identified by Morgan Stanley as the primary application scenario with outbreak potential.

Cost reduction not only means "the same project gets cheaper," it also means marginal energy storage projects that previously were not economically feasible are now investable. The report’s calculations indicate: under economic conditions comparable to existing LFP storage projects, sodium batteries allow storage capacity per megawatt of PV to increase by about 50%. In other words, longer storage duration now has the foundation for large-scale economic rollout.

In terms of market share, the report predicts sodium-ion batteries will account for 26% of global energy storage installations by 2030 and further rise to 60% by 2035. Northern storage projects will especially benefit—low-temperature advantages mean no need to pay as much for thermal management, and effective winter capacity is no longer sharply discounted.

Commercial Vehicles: The Most Underrated Demand Catalyst

Commercial vehicles are not just a range story, but one about utilization rate, fuel cost, and reliability.

In China, about 50% of light commercial vehicles (about 9.5 million units) are distributed in cold northern and western regions, where LFP batteries face 40% to 50% energy loss in winter. Sodium-ion batteries retain about 90% of capacity at minus 20°C, directly addressing the key concern for fleets: Can you run in winter, will range suddenly drop?

The cost calculation is equally aggressive. In emerging markets, power cost per kilometer is usually 3-5 times lower than diesel. If sodium battery cell costs are 30% to 40% lower than LFP, payback for high-use vehicles can be compressed to 1-2 years. The report calculates, in northern and western China, the payback period for electric light commercial vehicles can be shortened by over 1 year, a reduction of 30% to 50%.

This explains why commercial vehicles are the most easily underestimated source of demand—the target is not just new car sales, but also transforming large numbers of existing diesel light trucks, vans, and three-wheelers into replaceable, upgradable targets. The report sets the global commercial vehicle sodium battery penetration path at 43% by 2030 and 66% by 2035.

Small Passenger Vehicles: 175Wh/kg Is Enough to Enter

Entering the passenger vehicle market is more difficult for sodium batteries than for energy storage and commercial vehicles, but small cars are a structural exception.

Current sodium battery energy density has reached 175Wh/kg, close to LFP. For compact urban EVs, the primary factor in purchasing decisions is not range but price. This opens product territory under $15,000, with less than 500 km range, better low-temperature performance, and higher safety—entry-level EVs.

Industry moves are already aligned with this direction. BYD has announced a 10 billion yuan investment to build a 30 GWh sodium-ion battery factory, targeting ultra-low price city models such as Seagull; CATL and Changan have also launched mass-produced sodium battery passenger vehicle products. The report’s passenger vehicle penetration path is relatively restrained: about 8% by 2030, about 18% by 2035, focused on price-sensitive small cars.

The reference cited in the report is convincing: LFP’s share of Chinese automotive batteries was about 4% in 2019, to over 70% in 2025. Sodium batteries are now at a stage roughly akin to LFP around 2020—small scale, but energy density, supply chain readiness, and cost curve are nearing the trigger point.

$800 Billion: Penetrates the Entire Infrastructure Chain

Sodium batteries’ corresponding capital expenditure is not a point expansion but a complete infrastructure investment chain.

The report calculates that by 2035, the sodium-ion battery ecosystem will have accumulated about $800 billion in capital formation. Of this,

Energy storage deployment, about $360 billion, 45%, corresponding to about 4.2 TWh global cumulative storage installations;Manufacturing capacity, about $135 billion, 17%, including super factories, electrode production lines, cell assembly, supporting about 3 TWh nominal annual capacity;Supply chain and raw materials, about $115 billion, 14%, covering sodium carbonate, Prussian blue analogs, polyanion materials, cathode processing, hard carbon anodes, separators, and electrolytes;Logistics fleet, about $100 billion, 12%;Power and grid infrastructure, about $90 billion, 11%, including substations, switchgear, transmission enhancement, and grid connection facilities.

This power grid infrastructure dimension is often overlooked by the market but is an essential supporting link for large-scale implementation of sodium batteries. This is the biggest difference between sodium batteries and general battery technology iterations: once scaled up, the impact penetrates the entire ecosystem involving batteries, energy storage, grid, logistics, vehicles, and upstream materials.

The Strong Get Stronger: Tail-end LFP Capacity Faces Challenge

Sodium batteries may look like "cheaper batteries," but do not necessarily democratize the supply landscape.

The technical threshold determines that competition remains concentrated at the top. Sodium batteries require new cathode systems, hard carbon anodes, specialized electrolytes, and stricter process fit; only leading battery firms can handle R&D, validation, customer introduction, and expansion funding pressures. The report points out Morgan Stanley expects CATL’s compound profit growth rate from 2026 to 2028 to reach 30%; CATL Chairman Zeng Yuqun previously predicted that sodium batteries would eventually occupy 30% to 40% of the global battery market, "this is no longer just a vision, but is becoming operational reality".

Pressure is real for low-end capacity. The report says China's bottom 30%-40% LFP capacity—mainly small producers with limited technological differentiation—will face greater survival pressure once sodium battery annualized scale exceeds 100 GWh in 2028. Leading companies can control both LFP and sodium battery product lines, reclaim the low-end market, and the pattern will evolve further toward "winner takes more."

Bulk Commodity Landscape Changes: Lithium Under Pressure, Copper Reduced, Aluminum Benefits

At the commodity level, Morgan Stanley's commodity strategist Amy Gower notes lithium demand is still in a "sweet spot"—energy storage demand is booming, but sodium batteries are not yet deployed at scale. The lithium market is expected to keep a supply gap in 2026, and shift to slight surplus in 2027.

But the narrative switches in 2027. The report raises sodium batteries’ predicted 2030 penetration in energy storage from 8% to 26%, which will cut 2030 lithium carbonate equivalent (LCE) demand by about 135-160 kt; if sodium penetration in passenger vehicles hits 8% in 2030, LCE demand could fall by up to 88 kt more.

Thus, lithium price trends come under pressure: base case is $22,840/ton in 2026, $19,000 in 2027, $16,000 in 2028, $14,000 in 2029, $15,000 in 2030; pessimistic scenario sees 2027-2028 average prices fall to $10,000-$11,000/ton.

Copper and aluminum move in opposite directions. As sodium batteries replace copper foil with aluminum foil, copper demand may drop by about 200,000 tons in 2030, though not enough to end copper’s supply gap; aluminum faces upward risk due to higher metal usage in sodium batteries.

China Leads, Gaps in US, Europe, Korea

Geographically, China is the most advanced market for sodium battery industrialization. CATL’s second-generation sodium battery, BYD’s MC Cube-SIB storage products, and third-generation sodium technology are pushing sodium from lab to mass production for energy storage, commercial vehicles, and low-priced passenger cars.

The US is still in the early commercialization stage. The nearest reality is grid-level storage, data centers, and industrial/commercial backup power. GM has partnered with Peak Energy to develop next-gen sodium-ion batteries for grid storage, deployment estimated after 2028, with GM having exclusive rights to manufacture or authorize manufacture in the US; commercialization for EVs is further out.

Europe’s manufacturing lags, but strategic motivation is strong. Sodium is abundant, cheap, non-toxic, with dispersed supply, and can reduce reliance on imports of lithium and other minerals. The European Economic and Social Committee (EESC) includes it as a strategically important technology. Private firms like Altris (Sweden), Tiamat Energy (France) are transitioning from R&D to scaled production.

Korea adopts a more defensive posture. LG Energy Solution has set up trial sodium battery lines in China, targeting energy storage, UPS, and 12V batteries; Samsung SDI and SK On have limited public progress in commercialization.

Risks: Cheap Cells Do Not Guarantee Cheap Systems

Morgan Stanley also clearly lists the key variables that could invalidate optimistic projections.

The first risk is whether cell cost advantages can penetrate to the system. Lower energy density means more cells, bigger packs, and more auxiliary systems; in energy storage, more cells might mean bigger containers, higher land, HVAC, fire protection, and grid connection costs. If eventually system-level costs only end up 5%-15% cheaper than LFP instead of 30%-40%, the penetration curve will slow markedly.

Supply chain is the second barrier. Hard carbon anodes are less mature than graphite; layered oxide cathodes have cycle stability and moisture sensitivity issues; Prussian blue analogs face conductivity, dehydration, and potential cyanide concerns; polyanion materials are stable but with lower energy density and higher cost. If any single link is stuck, "cheap sodium" could become "emerging specialty material bottleneck."

There is also endogenous reflexivity risk: if sodium batteries threaten lithium demand, falling lithium prices will in turn boost LFP competitiveness, squeezing sodium batteries’ economic window.

Lastly, customer validation cycles slow things down. Big energy storage clients and project financiers require strict warranties, decay curves, fire safety, insurance, and operation records; automakers need to redo safety tests, certification, warranty models, and supply chain audits. Sodium batteries may win storage and high-utilization commercial vehicle markets first, but to fully replace LFP, they'll have to clear the barriers built by these slow variables.

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The above highlights are from Wind Chasing Trading Desk.

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